Hopeful news on growth emerges from major economies

Following the hard times faced by the global economy in 2008 and early 2009 with huge bankruptcies, widespread lay-offs, contracting GDPs, some positive results have been surfacing for some time regarding the prospects of the global economy.

The manufacturing activity indexes of several major regions and countries have recently been announced. The manufacturing sector of the Eurozone expanded for the first time since May 2008 with the index rising to 50.7 points in October. A reading above 50 indicates a growing sector while any reading below this figure shows a contraction. Analysts attributed the long awaited recovery in the manufacturing sector to the growth of output and an increasing pace of new orders along with the tapering off of job losses.

The growth of private sector business activity in the Eurozone was also reported at the fastest rate since 2007 with the index rising to 53 points in October. Amongst the 16 nation of the Eurozone, France contributed the most to the recovery, posting its fastest expansion rate since December 2007. The services sector of the Eurozone also grew at its fastest rate in almost two years as the index rose to 52.6 points in October.

Following the contractions of 2.5% in the first quarter and 0.2% in the second quarter, the Eurozone economy is very likely to return to growth in the third quarter while it is also expected to continue posting positive results in the last quarter based on these recent indications. However, some concerns still remain in place such as the rising unemployment rate, which stands at 9.7% as of September and uneven growth rates across the continent. While Germany and France have returned to growth, countries such as Italy, Spain and the UK are still on a weak note, analysts highlight.

When looking at the US, where the world's largest economy returned to growth oat plus 3.5% in the third quarter after the respective contractions of 0.6% and 0.7% in the first and second quarter, the index for the manufacturing sector rose to 55.7 points in October. This was the third consecutive month the sector expanded, registering the highest rate of growth in the past three and a half years.  The increase in new orders along with improved employment date were cited as reasons for the positive growth figures while the rising index is also interpreted as a sign that US economic growth will continue on a firm track for the last quarter.

The manufacturing activity of China also continued to expand in October, hitting an 18-month high of 55.4 points. Analysts attribute the sustained increase in the index to improved domestic and overseas demand together with rising employment rates. The country's economy grew 8.9% in the third quarter following the 7.9% growth posted in the second quarter and the 6.1% rise in the first quarter. In an attempt to tackle the plunge in exports, particularly to the US and Europe, the country had announced massive stimulus packages in order to increase domestic spending. Now that signs for a recovery both in Europe and the US are emerging, the accelerating growth of exports and higher manufacturing activity suggest another strong economic growth rate for the last quarter of 2009, according to analysts.